Bahrain cbank warns borrowing in the face of oil price

MANAMA, March 20, 2015

The Central Bank of Bahrain (CBB) has warned that borrowing in the face of oil price drop and the absence of a plan to reduce deficit, will have an adverse impact on the kingdom’s economic stability.

With increased government borrowing, public debt will exceed safe limits, affecting Bahrain’s credit ratings, the central bank said, in a report in the Gulf Daily News (GDN), our sister publication.

It will also increase the cost of overseas borrowing after public debt reached BD5,598 billion ($13.7 trillion) as of September 30, 2014 (BD3 million locally and BD2.5 million from abroad).

The bank’s warning comes in response to queries by parliament’s financial and economic affairs committee on a decree-law amending provisions on the issuance of development bonds.

The Finance Ministry wants to amend the law allowing it to raise the ceiling on government borrowing to BD7 billion, up from BD5 billion, to cover deficit and meet urgent funding needs. - TradeArabia News Service